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Technology Stocks : VALENCE TECHNOLOGY (VLNC) -- Ignore unavailable to you. Want to Upgrade?

To: David Penfield who wrote (13335)	7/23/1999 1:58:00 PM
From: Zeev Hed	Respond to of 27311

David, if the floorless becomes a reality, yes I do see a "clear and present danger" of a death spiral. CC can make more money by getting the price down to let say $1/share than by converting at $6 and selling at $12. But in order to achieve this they really need to get the volume up so they can get their shorting off (if they obey the clauses of the agreement). If you assume that there were no limitation on their ability to shorting (for instance using off shore brokers or "related" accounts), and they did not engage in intermediate covering, then then if their shorting started at the ceiling ($6/share) and they continued shorting all the way to $1, they make about 250%, still own the debenture (assume covering everything at $1), and could then convert to about 7.5 MM shares (while having pocketed about $18 MM ). Is this a likely scenario? I t has happened many times before, but on few occasions it was reversed in mid process (ASTN and ANCR are two examples), nevertheless, the bandits were not left holding the bag, in both cases they covered and converted close to the nadir (somehow, they know better then the rest of us when to push that "button"). For me, a signal that the danger is becoming imminent will be a breach of the $5.25 area. Zeev